S&P warns of socially explosive situation in euro zone

March 17, 2013|Reuters

BERLIN, March 18 (Reuters) - Standard and Poor's sees a highrisk that Spain, Italy, Portugal and France will not be able tocarry through necessary reforms as the unemployed become lesswilling to put up with austerity, S&P's Germany head TorstenHinrichs told a newspaper.

"The high unemployment in Spain, Italy and France issocially explosive," Hinrichs was quoted as saying in Monday'sNeue OsnabrÃ¼cker Zeitung.

"There has to be a social consensus for saving measures.High unemployment ... does not help."

Hinrichs said the people of Spain and Portugal had alreadyproven they were willing to bear with austerity measures, but"this cannot continue forever".

In Italy, there was the further danger that "a newgovernment may not be strong enough for the still necessaryreforms to strengthen growth," he said.

Hinrichs said S&P still rated Germany as a triple A withstable outlook and did not see any reason for concern: "It isone of the few AAA and stable countries that we still have inEurope".

The weak profitability of the banking sector due to theprofusion of banks was the only problem in Germany, he said,although he saw positive changes in the sector in terms ofequity capital and refinancing.